S Chand and Company has begun discussions with a number of India’s top merchant banks, as it explores a potential initial public offering (IPO) later this year.Biswarup Gooptu | ET Bureau | April 11, 2016, 07:43 IST

Textbook-focused publishing firm S Chand and Company has begun discussions with a number of India’s top merchant banks, as it explores a potential initial public offering (IPO) later this year.

Edelweiss, JM Financial and Axis Capital are amongst the multiple investment banks that have held discussions with the New Delhi-headquartered company, which also counts mid-market private equity firm Everstone Capital and International Finance Corp, the private sector investment arm of the World Bank, as investors.

“At this point, it is at an exploratory stage only. We are focused on growing the business, and our core season, which is December to April period, is currently underway. An IPO is just one of the options to raise capital,” said Himanshu Gupta, managing director, S Chand.

The company, which recently closed a $27 million funding round in November last year, may also look to raise fresh capital of $40 million-$50 million from investors - new and existing - during the course of the year. Till date, it has raised about Rs 370 crore in a mix of primary and secondary transactions.

S Chand has also been making a slew of investments over the past 18-24 months, primarily in the digital and ed-tech and education services segments. The company, which has plans on investing about $100 million over the course of the next three to five years, is targeting 25% of its overall revenue to be derived from digital and services by 2020.

“We are aggressively looking to meet that target, and have plans to continue investing. We have invested between $8 million-$10 million over the last two years, and will continue to work at that pace,” Gupta said.

An IPO by the one of the largest publishing companies in the country will be a closely watched affair, given that India has been one of the few standout markets in the otherwise moribund Asian region.

2015 saw 20 firms, a significant portion of which were backed by private equity investors, making their public market debuts, and raising more than Rs 13,000 crore in the process, according to data collated by VCCEdge. Industry analysts have predicted IPO proceeds to top $5 billion in 2016.

“Education is a very large proportion of the Indian consumer market. What we like about S Chand is that they are consolidating and rapidly growing in the content and content-enabled technology and services space, where there is no regulatory risk, and no long gestation, asset-heavy investments in land, buildings or hardware,” said Deep Mishra, managing director at Everstone Capital Advisors, and board representative.

According to industry estimates, India's publishing market is valued at about Rs 31,000 crore, and growing annually at an compounded rate of 20%, and is projected to touch Rs 74,000 crore by FY 2020.